Speaker of the House Paul Ryan (R-Wis.) has been the darling of the beltway press for years, the blue-eyed conservative golden boy of Congress. But on Friday he crashed and burned on national television. After seven years of doing everything in their power to cripple Obamacare and label it a disaster, Republicans couldn’t come up with a replacement their caucus would accept.
Who knows what will happen to Ryan’s American Health Care Act (AHCA) but I don’t think we will hear much about it for some time. And it is likely that President Donald Trump will attempt to sabotage Obamacare out of spite if he can.
The past two weeks of legislative fiasco highlighted a problem the GOP has had for a decade or more; it is actually three separate factions, conservatives, moderate conservatives and radicals. Last week the radicals were in control.
The 50 or so members of the Tuesday Group are the moderate conservatives led by Rep. Charlie Dent (R-Pa.). The 40 or so House Freedom Caucus members led by Rep. Mark Meadows (R-N.C.), plus some members of the Republican Study Committee, are the radicals. Both groups can prevent Republicans from passing any legislation that requires all Republican votes and members of both groups opposed Ryan’s bill on Friday.
Many radicals, like Meadows, are in gerrymandered districts. They are bullet proof at election time. Why should they be worried about President Donald Trump whose latest approval ratings are under 40 percent? Even the conservative Koch brothers thumbed their nose at Trump by offering campaign funds to any Republican that voted against the AHCA.
So where does Ryan go from here? Trump wants to move forward on to tax reform, infrastructure legislation and building a border wall. But remember, Congress has a lot to do in the next few months. Government funding for the remainder of fiscal year 2017 must be legislated by the end of April and the House must reach agreement with the Senate on a concurrent budget resolution for FYs 2018 through 2027. Plus Congress must raise the debt limit no later than the end of August and they must pass 12 appropriations bills for FY 2018 before the end of September.
Well, Meadows and his merry band of naysayers are salivating in anticipation of the budget and debt limit process, supremely confident after having scuttled the AHCA. Make no mistake; their primary objective is to cut federal spending to the bone and balance the budget. Consequently they will have little enthusiasm for spending billions to build a border wall or voting for infrastructure legislation if it involves government money.
Trump proved he is in over his head a few weeks ago when he said “Nobody knew health care could be so complicated.” Well, he is about to find out that health care complexity is just the beginning. If he thinks tax reform will sail through Congress by August he could be sadly disappointed. (And losing the battle on health care won’t help.)
So what is the connection between the Obamacare replacement and tax reform? According to the Congressional Budget Office (CBO) the final AHCA legislation repealed most Obamacare taxes and reduced federal revenues over 10 years by around $1 trillion. It also reduced federal spending by $1.15 trillion over the same period.
The current CBO projection of revenues (the baseline) for FYs 2018 through 2027 is $43 trillion, which includes Obamacare taxes. The AHCA would have reduced baseline revenues to approximately $42 trillion. Ryan wants his tax code reform to produce the same revenues as the current tax code so it won’t increase deficits. Now he must recalculate his tax proposal to collect $43 trillion instead of $42 trillion, which won’t be an easy task. In fact, some Republicans are beginning to believe that tax reform — instead of just adjusting rates and deductions — will not be possible.
The current CBO baseline spending for FYs 2018 through 2027 is $52.4 trillion, which will result in a deficit of over $9.4 trillion. The budget produced by the Republican controlled House last April slashed spending by $6.5 trillion and projected a balanced budget within 10 years. Obamacare repeal was a huge chunk of their spending reductions. Now that key part of their plan is gone, at least for the upcoming budget process.
A federal budget is a numbers game. How much will we collect and how much will we spend. The difference is either a surplus or a deficit. Ryan’s health care bill provided Republicans with an $839 billion reduction in one of their favorite targets, Medicaid. This spending cut was to be the spring board in up-coming budget negotiations to turn Medicare into a premium support program, cut Social Security and slash other so-called entitlements. That key element of their plan has been eliminated too.
So the wreckage of last week’s legislative failure leaves a weakened Speaker Ryan with an energized Freedom Caucus and numerous funding deadlines where the negotiations will be difficult. Trump could grow impatient because he doesn’t understand the process and turn on Ryan. Some of his advisors already have.
The budget blueprint for FY 2018 that Trump submitted to Congress on March 16 appalled the Democrats and even some Republicans quipped that it was “dead on arrival.” It looks like Trump’s first 100 days could end up being the biggest flop in modern presidential history.
Footnote: I always take some flack when I throw a lot of numbers at my readers. But folks, if we don’t understand some numbers the politicians can tell us anything and we have no way of knowing what they are saying.